Chu,a Non-Swimmer,fell Off a Boat into the Lake

question 15

Multiple Choice

Chu,a non-swimmer,fell off a boat into the lake."Help!" he cried."$100 to the person who saves me!" Frances then jumped in and held Chu's head above water until the boat's dinghy could reach them.

• A)Chu must pay Frances the reward since,by her action,she accepted his offer and gave consideration for his promise.
• B)Since Frances did not accept his offer,although what she did would have been consideration if there had been a contract,the offer is revocable and he need not pay her $100.
• C)If Frances had been under a legal duty to save Chu,even if there was a contract that he should pay her $100 for the rescue,Chu will not have to pay her.
• D)Chu must pay Frances the reward since,by her action,she accepted his offer and gave consideration for his promise and if Frances had been under a legal duty to save Chu,even if there was a contract that he should pay her $100 for the rescue,Chu will not have to pay her.
• E)All of the responses are correct.

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Definitions:

Adjusting Entry

An accounting record made to update the balances of accounts to reflect the true financial position before preparing financial statements.

Unexpired Insurance

The portion of the insurance premium that has not yet expired or been used up, considered a prepaid expense.

Office Supplies

Consumable items that are used in the daily operations of an office like pens, paper, and staplers.

Adjusting Entry

A journal entry made in accounting to update the record of revenues earned or expenses incurred that have not been previously recorded.